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By Kristin Roberts

WASHINGTON, June 23 (Reuters) - Iraqi forces have improved but cannot operate without significant help, according to a senior U.S. commander and two government reports on Monday.

Iraqi troops are not ready to take full responsibility for security and combat operations in any part of the country, said Lt. Gen. Lloyd Austin, the No. 2 U.S. military commander in Iraq.

"There are no areas that we would be willing to separate out right now to dedicate specifically to the Iraqi security forces," Austin told reporters at the Pentagon. "They are not there yet."

While the Pentagon, in a quarterly progress report to Congress, said Iraqi forces could be "mostly self-sufficient by the end of 2008," a senior U.S. military official said they will still require U.S. logistics and intelligence assistance for years.

The assessments come as the Pentagon pulls U.S. troops out of Iraq after a buildup last year. By August, five combat brigades will have withdrawn, leaving about 140,000 U.S. troops in the war zone.

Commanders then will assess violence and the condition of Iraqi troops as they weigh whether more American forces can be withdrawn by the end of 2008.

Violence in Iraq has declined sharply over the past year due to an increase in U.S. troops, a decision by Sunni sheiks to switch sides and fight against al Qaeda and a cease-fire declared by anti-American Shi'ite cleric Moqtada al-Sadr.

While the number of attacks began to climb again in April and May as Iraqi forces clashed with Shi'ite militias, the average number of attacks per week is 80 percent below a year ago, Austin said.

The number of civilian casualties in May 2008 was 75 percent lower than July 2007, the Pentagon report said.

10-YEAR PLAN

In its report, the Pentagon said recent Iraqi-led operations against Shi'ite militias in Basra and Baghdad's Sadr City slum, as well as combat operations against al Qaeda in Mosul, demonstrated the force's improved capabilities.

The Pentagon report said reduced violence and a gradual improvement in the capabilities of Iraqi forces should allow the United States to hand control of two more provinces to Iraqi authorities in June and July.

Of Iraq's 18 provinces, nine are now under Iraqi control, but with U.S. oversight.

But a senior U.S. military officer said it would be 10 years before Iraq had a fully modernized force capable of defending its territory.

That officer, speaking on condition of anonymity, said Iraq aimed to have its smaller counterinsurgency force in place by 2012.

Iraq will need continued help from U.S. troops to achieve both goals, according to that official.

Security gains made in Iraq are fragile and reversible, the Pentagon warned. The situation is further complicated by the Iraqi government's uneven progress on political and economic measures, it said.

Iraq's government, for example, remains unable to execute its budget or provide essential services to the people, and efforts by Prime Minister Nuri al-Maliki to persuade Iran to stop supporting Shi'ite militias have so far failed, according to the report.

"Although the recent improvements in the security situation across Iraq are significant, the Iraqi government will have to take deliberate measures to sustain these gains," the Pentagon said.

The Government Accountability Office, Congress' investigating agency, on Monday gave a downbeat assessment, saying Iraqi forces remain largely unable to perform operations without help from U.S. and coalition forces.

The GAO said Iraq has failed to meet many of the goals set out by the Bush administration more than a year ago and it urged the Pentagon and State Department to draft a new strategy.

That strategy should define U.S. goals and objectives after July 2008 and address long-term aims, the GAO said.

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